MAGELLAN HEALTH,INC. (NASDAQ:MGLN) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement.
Senior Notes Offering
On September22, 2017, Magellan Health,Inc. (the “Company”) completed the public offering of $400.0 million aggregate principal amount of its 4.400% Senior Notes due 2024 (the “Notes”). The Notes are governed by an indenture, dated as of September22, 2017 (the “Base Indenture”), between the Company, as issuer and U.S. Bank National Association, as trustee, as supplemented by a first supplemental indenture, dated as of September22, 2017 (the “First Supplemental Indenture” together, with the Base Indenture, the “Indenture”), between the Company, as issuer, and U.S. Bank National Association, as trustee. A copy of the Base Indenture is filed as Exhibit4.1 hereto and incorporated by reference herein, and a copy of the First Supplemental Indenture is filed as Exhibit4.2 hereto and incorporated by reference herein.
The Notes were sold in a public offering to a registration statement on FormS-3 (File No.333-220281) (the “Registration Statement”) and a related prospectus and prospectus supplement filed with the Securities and Exchange Commission and were issued to an underwriting agreement (the “Underwriting Agreement”), dated as of September15, 2017, among the Company and J.P. Morgan Securities LLC, MUFG Securities Americas Inc. and Wells Fargo Securities, LLC as representatives of the several underwriters named therein (the “Underwriters”).
The Notes bear interest payable semiannually in cash in arrears on March22 and September22 of each year, commencing on March22, 2018, which rate is subject to an interest rate adjustment upon the occurrence of certain credit rating events as described in the Indenture. The Indenture provides that the Notes are redeemable at the Company’s option, in whole or in part, at any time on or after July22, 2024, at a redemption price equal to 50% of the principal amount of the Notes being redeemed plus accrued and unpaid interest thereon to, but excluding, the redemption date.
The Notes mature on September22, 2024. Prior to July22, 2024 (two months prior to the maturity date of the Notes), the Company may redeem the Notes at its option, at any time in whole, or from time to time in part by paying a “make-whole” premium plus accrued and unpaid interest thereon to, but excluding, the date of redemption.
The Indenture also contains certain covenants which restrict the Company’s ability to, among other things, create liens on its and its subsidiaries’ assets; engage in sale and lease-back transactions; and engage in a consolidation, merger or sale of assets.
The Company expects the net proceeds from the issuance and sale of the Notes will be approximately $394.7 million after deducting the underwriting discounts and commissions and estimated offering expenses. The Company intends to use the net proceeds from this offering for working capital and general corporate purposes, and the termination and repayment of the obligations under its existing credit facilities expiring on July23, 2019 and December29, 2017.
The foregoing description does not constitute a complete summary of the Indenture and is qualified by reference in its entirety to the full text of the Indenture.
2017 Credit Agreement
On September22, 2017, the Company entered into a credit agreement with The Bank of Tokyo-Mitsubishi UFJ,Ltd. (“BTMU”), JPMorgan Chase Bank, N.A., Compass Bank (d/b/a BBVA Compass), U.S. Bank National Association and Wells Fargo Securities, LLC as co-syndication agents, BTMU as administrative agent and the lenders party thereto from time to time, that provides for a $400.0 million senior unsecured revolving credit facility and a $350.0 million senior unsecured term loan facility to the Company, as the borrower (the “2017 Credit Agreement”).
The proceeds of the 2017 Credit Agreement were and will be used for (a)working capital and general corporate purposes of the Company and its subsidiaries, including investments and the funding of acquisitions, (b)the repayment of all outstanding loans and other obligations (and the termination of all commitments) under (i)the credit agreement, dated as of July23, 2014 among Magellan Pharmacy Services,Inc. (“Magellan Pharmacy”) (as successor in interest to Magellan Rx Management,Inc. (“Magellan Rx”)), the Company, the lenders party thereto, and Citibank, N.A., as administrative agent, (ii)the credit agreement, dated as of June27, 2016 among Magellan Pharmacy, the Company, the lenders party thereto and BTMU, as administrative agent and (iii)the credit agreement, dated as of January10, 2017 among Magellan Pharmacy, the Company, the lenders party thereto and BTMU, as administrative agent (the agreements referred to in this clause (iii)and in clauses (i)and (ii)above, collectively, the “Existing Credit Agreements”) (the termination and repayment of the obligations under the Existing Credit Agreements, collectively, the “Refinancing”) and (c)payment of fees and expenses incurred in connection with (i)the entering into of the 2017 Credit Agreement and related documents and the incurrence of loans and issuance of letters of credit thereunder and (ii)
